In all my newsletters, Iโve always shared my own opinions, insights, and suggestionsโgained from personal experience, facing challenges, and finding my own solutions.
Todayโs topic isnโt quite my forte. But itโs an interesting oneโsomething I personally sought to learn.
Weโre bootstrapped. I have never sought funding or found myself in a dire or impromptu situation where I must present my plan to investors.
So, for this newsletter (and, of course, my personal good), I went down searching for authentic resources and expert tips on the topic. Andโฆ
I found thisโone of the most insightful essays on presenting to investorsโfrom one of the most renowned investors.
Paul Graham, founder of Y Combinator, a startup accelerator company with 400+ companies valued at over $100M.
Someone most entrepreneurs admire (including me) for his work.
Enough intro, letโs cut to the chase.
Paul Grahamโs tips on how to present to investors:
Background info: Y Combinator (YC) hosts Demo Day twice a year, inviting investors to hear presentations from the startups theyโve recently funded.
Startups present what theyโve built so far, providing an opportunity to connect with investors and seek further support.
Paul and his partners noticed most startups face similar challenges, so the compilation of these suggestions might be useful for a wider audience.
And the suggestions are:
1. Explain what youโre doing
Investors need to quickly grasp your product or service.
Begin your presentation by briefly explaining what your company does. Avoid lengthy introductions; get straight to the point.
As Paul explains,
Say what you’re doing as soon as possible, preferably in the first sentence.
โWeโre Jeff and Bob, and weโve built an easy-to-use web-based database. Now weโll show it to you and explain why people need this.โ
2. Get rapidly to demo
โA demo explains what you’ve made more effectively than any verbal description.โ โ Paul
After briefly outlining the problem you’re addressing, demonstrate how your solution works.
Ensure your demo is purposeful and directly relates to the problemโnot just some show-off of your feature catalog.
3. A narrow description is better than a vague one
โYour primary goal is not to describe everything your system might one day become, but simply to convince investors you’re worth talking to further.โ
While your product may have broad potential, provide a clear and specific description.
Overly broad explanations can be confusing. Start with a focused description and expand as needed.
4. Donโt put too many words on slides
โWhen there are a lot of words on a slide, people just skip reading it. So look at your slides and ask each word “Could I cross this out?” โ Paul.
Use slides to highlight key points, not to convey detailed information. Limit text and avoid reading directly from them.
โThey should be something in the background as you face the audience, not something you read to your audience sitting behind you.โ
5. Donโt over-explain your business model
Paul explained two reasons why you shouldnโt explain too much about your business model:
(I) That’s not what smart investors care about in a brief presentation, (II) Any business model you have at this point is probably wrong anyway.
Solution? Paul said that if youโre solving a critical problem, youโll sound a lot smarter talking about it than about the business model.
So, instead of this, spend time discussing interesting things you know a lot about.
6. Specific numbers are good
Specific numbers are good and can make your case more compelling. If you have user metrics or other data, present them, even if theyโre preliminary.
โBut don’t give them more than four or five numbers, and only give them numbers specific to you. You don’t need to tell them the size of the market you’re in. Who cares, really, if it’s 500 million or 5 billion a year?โ โ Paul.
The important part isnโt how much you can make in a year, but how you get there.
7. Have one person talk
As Paul mentioned, startups often want to show all the founders are equal partners. While itโs a great instinct, not all four founders should share the stage to presentโit often breaks the flow of the talk and can be distracting.
To maintain flow, have the most effective communicator lead the presentation. An exception is to ask an expert in a specific technical field to explain or walk through certain aspects. This adds credibility to your talk.
8. Tell stories about users
Itโs great if you can talk about the problems specific users had and how you solved them. It helps investors understand youโre solving an actual problemโnot a problem you have a theory of it being a problem.
โThe best stories about user needs are about your own. A remarkable number of famous startups grew out of some need the founders had: Apple, Microsoft, Yahoo, Google. Experienced investors know that, so stories of this type will get their attention.โ โ Paul.
So, demonstrate your product’s impact with real-world examples. Stories about how users benefit can make your presentation more relatable.
9. Don’t try to seem more than you are.
You donโt need to overstate your progress or capabilities. Youโre just a few months old and may not have an established workspace, so you donโt need to seem more than you are.
โSmart investors can see past such superficial flaws. They’re not looking for finished, smooth presentations. They’re looking for raw talent.โ โ Paul.
All you need to convince them is that youโre smart and onto something good.
10. Leave them with a memorable soundbite
As an investor himself, Paul knows how investors hear a lot of pitches and they all blur together after a while.
To have an edge over others, you need to make a memorable soundbite in their heads about you or your business.
Paul suggests developing a one- or two-word catchphrase for a startup and launching it clearly (but casually) in your talk.
For example, Viawebโs was โthe Microsoft Word of e-commerce.โ
A memorable tagline helps investors recall your company later.
I hope I did justice to what Paul Graham has already said on his website.
[paulgraham(dot)com]
Now what? Put these tips to some good use in your next investor pitch.
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Until the next time,
Happy business planning ๐
